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No guaranteed prison time for Wilmington Trust defendants

DOVER, Del. — There’s no guarantee that four former executives of the only financial institution to be criminally charged in connection with the federal bank bailout program will be sentenced to prison for fraud.

But even if a judge orders prison time for the former Wilmington Trust officials at their sentencings later this month, they won’t be led away in handcuffs.

In a court filing Thursday, prosecutors said they will not oppose the defendants’ requests to be allowed at least two months, possibly more, to “self-surrender” to prison, a privilege not granted to most criminal defendants.

Former Wilmington Trust president Robert Harra Jr. and former chief financial officer David Gibson are to be sentenced on Dec. 17. Former chief credit officer William North and former controller Kevyn Rakowski will be sentenced two days later.

A federal jury convicted the four former executives on all charges in May after a six-week trial. Prosecutors alleged that in the wake of the 2008 financial crisis, the defendants misled regulators and investors about Wilmington Trust’s massive amount of past-due commercial real estate loans before the bank was hastily sold in 2011 as it teetered on the edge of collapse. The century-old bank imploded despite receiving $330 million from the federal Troubled Asset Relief Program.

According to Thursday’s court filing, if U.S. District Court Judge Richard Andrews orders prison time for any of the former bank officials, they would be allowed to report to the Bureau of Prisons on or after Feb. 19.

“I would not characterize the amount of time as lenient,” Kim Reeves, a spokeswoman for the U.S. Attorney’s Office, said of the time the defendants would be granted before being locked up.

Prosecutors and defence attorneys have indicated in court filings that Harra and Gibson face 108 to 135 months in prison under federal sentencing guidelines, while North and Rakowski face 87 to 108 months behind bars. But that doesn’t necessarily mean they will receive prison time. Defence attorneys are seeking probation for their clients. They also are asking that they be allowed to remain free pending resolution of their appeals, a process that could take a year or more.

Attorneys on Thursday asked the judge to be allowed to file briefs on whether the defendants should be released pending appeal, with a possible hearing date of Jan. 21 for oral arguments.

“We have opposed and will continue to oppose bail pending appeal,” U.S. Attorney David Weiss said in a prepared statement. Weiss also noted that, when there is no risk of flight or danger to the community, defendants are routinely permitted to self-report to prison.

Meanwhile, attorneys for Rakowski, 65, filed a 60-page sentencing memorandum on Thursday asking that she receive probation instead of prison time. They described her as a “relatively passive participant” in the activities that led to her conviction and said she had lived “an honourable and law abiding life” prior to that time.

Rakowski’s attorneys also cited various health issues she faces, and the recent death of her husband, who died in September after falling at home and suffering a head injury — two weeks after he wrote a letter to the court seeking leniency for his wife. Rakowski’s two adult daughters also are among the friends and family members who wrote letters on her behalf, although the daughters’ letters are totally redacted in the previously sealed court filing.

Pursuant to an order issued last week, attorneys for the other defendants have until Friday to submit redacted versions of their sentencing materials. Prosecutors objected after the materials were filed under seal, saying there is a presumption of public access to such documents.

“The exhibits in support of defendants’ sentencing memoranda largely consist of letters to the court authored by third parties on behalf of defendants,” prosecutors wrote in a court filing. “Defendant Harra, for example, attached over one hundred letters to his sentencing memorandum, including letters submitted by current public officials, former public officials, and other prominent Delawareans.”